Emission tax and optimal privatization in Cournot–Bertrand comparison

Lili Xu (), Sumi Cho and Sang-Ho Lee ()

Economic Modelling, 2016, vol. 55, issue C, 73-82

Abstract: We compare a Cournot with a Bertrand duopoly in a differentiated mixed market when both emission tax and privatization policies are used together. We find that the optimal emission tax is always lower than the marginal environmental damage, and it is always lower under Cournot than under Bertrand. We also find that the optimal privatization is always a partial privatization, and it is always higher under Cournot than under Bertrand. The socially optimal combinations of emission tax and privatization will damage the environment most, but Cournot yields lower environmental damage and social welfare than those under Bertrand. Finally, we show that the environmental damage is non-monotone in the level of privatization under both Cournot and Bertrand competitions.

Keywords: Emission tax; Partial privatization; Product differentiation; Cournot–Bertrand Comparison (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (54)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:55:y:2016:i:c:p:73-82

DOI: 10.1016/j.econmod.2016.02.008

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